Casio 2000 Annual Report Download - page 19

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keyboards with key lighting systems, audio product sales
decreased due to the negative effect of yen’s appreciation on
overseas sales. Domestic sales rose 4.2%, with overseas sales
essentially unchanged.
ANALYSIS OF NET INCOM E Although the cost of sales ratio
worsened 0.8 percentage point to 68.7%, selling, general
and administrative expenses as a percentage of net sales
declined 1.1 percentage points to 23.6%. Research and
development (R&D) expenses were ¥12,338 million, or
3.0% of net sales. The Company changed its method of
accounting for R&D in accordance with changes in
accounting standards for R&D and software development
in Japan. R&D expenses, recalculated in accordance with
accounting methods used in the previous fiscal year, would
have been ¥19,160 million, compared with ¥20,552
million in the previous term.
As a result of the above factors, despite the adverse im-
pact of the yen’s appreciation on the profitability of
overseas sales, the operating income margin improved 1.9
percentage points to 4.7%, and operating income climbed
55.2%, or ¥6,926 million, to ¥19,477 million.
Net financial expenses (interest and dividends income
minus interest expense) decreased ¥1,062 million to
¥2,086 million, as interest expense declined ¥959 million,
reflecting both lower levels of debt and a 0.4 percentage
point decline in the average interest rate to 1.7%. Expenses
for the disposal and devaluation of inventories declined
from ¥14,641 million in the previous term, which included
¥8,790 million in inventory devaluation at the parent com-
pany related to revising its product strategy, to ¥5,315
million. Other–net went from ¥3,825 million in net ex-
penses in the previous fiscal year to ¥3,192 million in net
other income. Consequently, despite a foreign exchange
loss–net of ¥2,993 million, other expenses, net of other in-
come, decreased ¥13,844 million to ¥7,202 million.
Owing to high growth in operating income and the
sharp drop in other expenses, income before income taxes
was ¥12,275 million, compared with a loss before income
taxes of ¥8,495 million in the previous term. Net income
was ¥6,173 million.
Shares outstanding at fiscal year-end declined by 446
thousand shares mainly owing to the retirement of treasury
stock. Potential dilution, assuming that all convertible
COMMON-SIZE ANALYSIS OF INCOME STATEMENTS
Net sales = 100.0
2000 1999 1998
Net sales 100.0 100.0 100.0
Cost of sales 68.7 67.9 65.6
SG&A expenses 23.6 24.7 21.4
R&D expenses 3.0 4.6 4.6
Operating income 4.7 2.8 8.4
Income before income taxes 3.0 — 6.9
Net income 1.5 — 2.3
INTEREST COVERAGE
Millions of yen
2000 1999 1998
Operating income ¥19,477 ¥12,551 ¥42,228
Interest and dividends income 1,928 1,825 2,969
Total ¥21,405 ¥14,376 ¥45,197
Interest expense ¥14,014 ¥14,973 ¥14,898
Interest coverage (times) 5.33 2.89 9.23